Correlation Between Morgan Stanley and Us Treasury

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Us Treasury at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Morgan Stanley and Us Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Stanley Direct and Us Treasury Intermediate, you can compare the effects of market volatilities on Morgan Stanley and Us Treasury and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Morgan Stanley with a short position of Us Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Us Treasury.

Diversification Opportunities for Morgan Stanley and Us Treasury

-0.61

Correlation Coefficient

Morgan Stanley  Us Treasury

Excellent diversification

The 3 months correlation between Morgan and PRTIX is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Us Treasury Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Treasury Intermediate and Morgan Stanley is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Morgan Stanley Direct are associated (or correlated) with Us Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Treasury Intermediate has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Us Treasury go up and down completely randomly.

Pair Corralation between Morgan Stanley and Us Treasury

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Us Treasury. In addition to that, Morgan Stanley is 3.05 times more volatile than Us Treasury Intermediate. It trades about -0.01 of its total potential returns per unit of risk. Us Treasury Intermediate is currently generating about 0.13 per unit of volatility. If you would invest  491.00  in Us Treasury Intermediate on December 28, 2024 and sell it today you would earn a total of  12.00  from holding Us Treasury Intermediate or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  Us Treasury Intermediate

Morgan Stanley Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Direct has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Us Treasury Intermediate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Us Treasury Intermediate are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Us Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Us Treasury

The main advantage of trading using opposite Morgan Stanley and Us Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Us Treasury can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Us Treasury will offset losses from the drop in Us Treasury's long position.

The idea behind Morgan Stanley Direct and Us Treasury Intermediate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..